Semiconductor giant Broadcom to move HQ from S'pore to US

SINGAPORE-headquartered American chipmaker Broadcom is re-locating its legal home address to the United States.

The move to change its parent from a Singapore company to a US corporation is expected to bring US$20 billion in revenue back to the US, said US President Donald Trump, who made the announcement on Thursday at a White House press conference.

Broadcom chief executive Tan Hock Eng, who was also at the briefing, said a tax-reform proposal put forward by the Republicans will make the US a friendlier place for business.

"We believe the USA presents the best place for Broadcom to create shareholder value," he said in a statement.

"We expect the tax-reform plan effectively to level the playing field for large multinational corporations headquartered in the United States, and to allow us to go all in on US redomiciliation."

But the company said the move will take place - whether or not the Republican plan passes.

The re-domiciling, which has to be approved by shareholders, will reportedly also facilitate Broadcom's US$5.9 billion takeover of US network provider Brocade Communications Systems.

The deal, announced last November, has been delayed as a result of scrutiny by the Committee on Foreign Investment in the US, which reviews the national security implications of foreign investments in American companies.

Becoming a US-based company might help Broadcom get around these regulations and push the deal through.

Broadcom's website lists San Jose, California, as its existing corporate co-headquarters, alongside Singapore.

The Nasdaq-listed Fortune 500 company was acquired by Singapore-based Avago Technologies in a US$37 billion mega-deal completed last year.

The combined company became the third-largest US semiconductor maker by revenue, behind Intel and Qualcomm.

Broadcom, a major supplier to Apple, logged US$13.2 billion in revenue globally for the year ended Oct 30, 2016.

Its presence in Singapore is represented by its corporate co-headquarters in Yishun, as well as its facilities in Depot Road and North Coast Drive, said the company's website.

Broadcom had approximately 15,700 employees worldwide as at a year ago; about 40 per cent of them are based in Asia, and 1,000 in Singapore, the company's 2016 annual report said.

The same report also disclosed that the company enjoys several tax incentives in Singapore awarded by the Economic Development Board (EDB); these are scheduled to expire on various dates between 2020 and 2025. To retain these benefits, Broadcom has to meet certain conditions, such as by maintaining its corporate headquarters and specified intellectual property activities here.

The company's latest decision to re-domicile its headquarters comes on the back of moves it made in 2014 to shift some activities out of Singapore.

Broadcom moved some of its operations out of Singapore to Ireland after March 2014, at the time some tax incentives it had enjoyed expired. Back then, Broadcom declined to elaborate on the exact nature of its move to Ireland.

The move could have been one reason Singapore's semiconductor output shrank 11 per cent year on year in April 2014. At that time, the dip was much remarked upon, especially when the EDB said it was due to the actions of one firm, but did not give details.

In response to Broadcom's latest move to become a US-based company, Mr Pee Beng Kong, EDB's director for electronics, said the chipmaker's leadership team has always been based in the US.

"It has good business reasons to relocate its legal headquarters back to the US and we fully appreciate that. We understand that Broadcom's operations in Singapore, which include manufacturing and R&D, will remain unchanged and will not be affected by this move."

He added that Singapore's electronics manufacturing industry remained "highly competitive" and has benefited from a slew of recent investments.

PwC Singapore strategy leader Richard Skinner said that re-domiciliation is an "expensive and complex process to implement", so companies do not make the decision lightly.

Such moves could be driven by politics, manpower, or economics - such as the cost base, proximity to key markets and incentives such as taxes and grants.

As a result of re-domiciliation, a company's operations "would likely remain but be reduced in size", he said.

"With re-domiciliation, many associated headquarter functions such as management, finance and HR are likely to be moved. This would also likely mean a reduction in revenues and profits recognised in the original country."